Colonial Motor Co full-year profit falls 7.4% on slimmer margins, outlook dims

Wednesday 19th August 2015

Colonial Motor Co, the listed motor vehicle distributor, posted a 7.4 percent decline in full-year profit and said margins have contracted for its car dealerships and demand for tractors has been dented by weaker dairy prices.

Net profit fell to $25.3 million in the 12 months ended June 30, from about $28 million a year earlier, the Wellington-based company said in a statement. Operating revenue climbed about 13 percent to $789 million.

Colonial Motor acquired the Jeff Gray BMW and Mini business in the first half of its financial year, adding to its existing Ford and Mazda dealerships, and contributing "a small but positive contribution in their first year," the company said. New dealerships including Southern Autos - Manukau, which sells Peugeot, and Citroen cars and Isuzu light commercial vehicles, accounted for much of the revenue growth in the year, it said.

"Headline numbers of new light vehicle registrations have remained high, underpinned by increased rental car sales," the company said. "However the strong growth of past years has eased. In this market, margins are tighter, putting pressure on our car dealerships. Sales and profitability of heavy trucks remain strong, with continuing forward orders. Tractors have been adversely affected by the declining dairy payout."

It said the outlook is for "a less favourable environment, with a lower exchange rate, lower dairy payout, and lower general confidence" although not all parts of the economy are adversely affected.

The company said it has entered a sale agreement for its Wellington property occupied by Capital City Motors and will lease back the site for two years while assessing alternative sites.

It will pay a final dividend of 20 cents a share on Oct. 19 with a record date of Oct. 9. That makes 33 cents for the year, down from 35 cents in 2014.

Colonial Motor shares were unchanged at $5.97 and have gained 2.4 percent this year.

BusinessDesk.co.nz

Comments from our readers

No comments yet